KUALA LUMPUR: The government will continue to support ongoing people-centric infrastructure projects financed through quasi-fiscal instruments while mitigating further liabilities exposure, given the limited fiscal space, said the Finance Ministry (MoF).
In its 2024 Fiscal Outlook and Federal Government Revenue Estimates report released today (October 13), it said the government has outlined fiscal sustainability reforms to improve governance and enhance public finances as key enablers towards achieving sustainable and inclusive growth, in line with the Madani Economy framework.
It said Government Guarantee (GG) issuances are being re-evaluated and further prudent measures have been imposed on new GG issuances to manage risks and exposures.
It said the government will also enhance the reporting of financial risks, including guarantees approved under Act 61 and Act 96 in line with the upcoming Public Finance and Fiscal Responsibility Act (FRA).
Furthermore, numerical limits on government financial guarantees will be introduced, in accordance to international best practices on prudent fiscal and risk management.
In the medium term, other liabilities are expected to moderate due to measures which include re-evaluating the public-private partnership (PPP) approach through PPP 3.0 framework, enhancing the existing policy frameworks and guidelines, as well as ensuring sufficient allocations for repayment of obligations and commitments.
The PPP 3.0 will emphasise on implementing user-pay projects with minimal financial requirements from the government. In addition, the upcoming FRA will impose the need to assess the government's risk exposure and formulate the corresponding mitigation plan.
The MoF said, as of the end-June, the total debt and liabilities exposure were at RM1,508.6 billion or 81.6 per cent of Gross Domestic Product (GDP), while total outstanding GGs stood at RM317.9 billion or 17.2 per cent of the GDP.
For the same period, it said committed guarantees have reduced to RM221.4 billion as compared to RM224.1 billion last year, and total outstanding financial commitment of 105 PPP projects increased slightly to RM93.8 billion (2022: RM92.1 billion).
The financial obligation arising from Private Finance Initiative (PFI) was at RM45.9 billion (2022: RM47.1 billion).
The outstanding obligation of PBLT Sdn Bhd, incorporated in 2005 to improve housing quarters, construct training centres and refurbish police stations as recommended by the Royal Commission to Enhance the Operation and Management of the Police, was at RM2.5 billion (2022: RM3 billion). --BERNAMA